On Monday, listed telecom fiber provider Lumen Technologies announced that it is selling its Latin American business to $37 billion private equity infrastructure investor Stonepeak for $2.7 billion. Australia‘s largest pension fund, AustralianSuper, is investing alongside Stonepeak in the transaction.
Under terms of the deal, Lumen will divest its LatAm business, which will henceforth operate as an independent, U.S.-headquartered portfolio company owned by Stonepeak, while maintaining the division’s Latin American management and organization. Lumen will continue to serve joint customers in the region, and will retain a strategic relationship with the newly independent firm, in areas such as reciprocal reselling and network arrangements that leverage each other’s fiber assets, data centers and other network holdings.
The $2.7 billion purchase price represents a 9x multiple of the Latin American business’s 2020 estimated adjusted EBITDA, and will provide Lumen with additional capital to accelerate new investments in key growth areas, reduce its debt, and continue to evaluate share buybacks.
“This transaction unlocks value for our shareholders while allowing us to maintain our global presence through our strategic relationship with the New LatAm Company,” Lumen President and CEO Jeff Storey said in announcing the agreement. “This transaction allows Lumen to focus investments in key areas of the business to drive future growth while providing flexibility for our capital allocation strategy.”
New markets
For Stonepeak, the transaction represents an opportunity to invest in a Latin American communications platform with an extensive subsea, terrestrial fiber and data center footprint across the region, including several of its large metro markets.
“Lumen’s Latin American business is a market leader with a strong footprint and exciting potential for expansion,” Stonepeak Managing Director Brian McMullen said. “Stonepeak has been an early and active investor in digital infrastructure globally and we are looking forward to applying our experience and additional capital to Lumen’s Latin American business.”
Last week, Lumen announced a series of key strategic network expansions in the European markets of France, Switzerland and Spain. The expansion included the construction of a new 180-mile fiber route between Lyon, France and Geneva, Switzerland, connecting the cities of Grenoble, Chambéry and Annecy. In Spain, Lumen announced the completion of a 1,060 route mile national fiber ring with a new segment spanning more than 170 route miles between the city of Salou and the French border. Lumen also built a new metro network in Barcelona and connected to the MAREA trans-Atlantic subsea cable landing station in Sopelana.
